Unfrozen Assets

Much haggling in The Hague

In 1899 Tsar Nicholas II of Russia called a meeting of European leaders in The Hague, The Netherlands, to discuss disarmament and world peace. Out of that meeting was formed the Permanent Court of Arbitration that has ever since served as an international referee in settling disputes between sovereign nations. Last week, a new body, the Iran-U.S. Claims Tribunal, began proceedings in the court's headquarters. Its task will probably be far larger and more complicated than anything the old court encountered in its 82-year history: settling the claims of an estimated 3,300 corporations against the revolutionary government of Iran.

The immediate stake is $1 billion in Iranian assets that had been frozen by the U.S. before the release of the 52 American hostages in January. Apart from the $1.4 billion in claims by U.S. banks against Iran, the disposition of the funds represents one of the last major unsettled financial issues from the agreement that freed the hostages.

Workmen have been hastily installing extra steel filing cabinets for the tribunal in the castle-like Peace Palace, the court's home since 1913. Companies by the hundreds will soon begin bringing in documents. Among the largest claims to date: $50 million by the Houston firm of Brown & Root for the construction of shipyards and naval bases; $100 million by General Telephone & Electronics for the development of a telecommunications switching network; and $118 million by E.I. du Pont de Nemours for the building of a synthetic-fiber plant.

Settlement will be a painstaking and very expensive process. Only three people have been hired who can simultaneously translate the proceedings into English and Farsi. They will have to be parceled out among the 800 individual cases that companies with more than $250,000 in claims apiece are expected to submit. Moreover, one U.S. official reports that other Farsi translators are charging up to $200 for each double-spaced page of legal papers.

The Iran-U.S. Claims Tribunal that will hear the cases consists of three Iranians, three neutrals (two Swedes and a former head of France's highest court) and three Americans. The Americans are: Howard Holtzmann, 59, a New York lawyer; George Aldrich, 49, a member of the United Nations International Law Commission; and Richard Mosk, 42, a Los Angeles lawyer.

When the arbitration panel actually begins to hear arguments next spring, it will split into three chambers, each with one neutral, one American and one Iranian. Although they have been meeting periodically since last July, the tribunal's members have still not agreed on basic operating rules or even whether the cases need to be decided by unanimous vote or simple majority rule. Another key detail over which both Washington and Tehran continue to squabble concerns whether Iran or the fund should receive the interest on the $1 billion settlement account. With Iran in continuing turmoil, no one knows if the Tehran government will continue to support the arbitration process.

For U.S. companies, arbitration will seem like nothing so much as a long dark tunnel that might actually lead nowhere. Arguing cases before the tribunal will eat up hundreds of thousands of dollars in legal fees. The most optimistic estimates are that the panel will still be sitting in 1985. Worst of all, no one expects that the $1 billion settlement account will come close to covering the legitimate claims for compensation. Though Iran has promised to replenish the fund, that too remains in doubt. Thus, the companies face the prospect of protracted litigation with only partial return, or none at all, to reward them for their trouble. -

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